аЯрЁБс > ўџ E G ўџџџ D џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅС { П T' bjbjiZiZ %6 0 0 F л 2 џџ џџ џџ ]    " Р
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С+ " MEMORANDUM
April 12, 2002
TO: Members of the ABA Task Force on Gatekeeper Regulation and the Profession
FROM: Ed Krauland
Stщphane Lagonico
RE: The British Crown Dependencies
______________________________________________________________________________
Guernsey, Jersey, the Isle of Man (IOM) and Gibraltar have comprehensive laws and regulations to prevent, deter, detect, pursue and punish crime of all kinds, wherever committed, including money laundering and tax evasion as well as drug trafficking, terrorism and fraud. The Crown Dependencies have adopted a common approach to tackle money laundering, embodied in the Anti-Money Laundering Guidance Notes. Guernsey has set in place several laws and regulations to address money laundering. On January 1, 2000, the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, and Regulations, 1999 came into force. Money laundering is broadly defined and embraces the proceeds of all indictable offence, including tax evasion. Similar laws exist in the other British Crown Dependencies. New criminal offences were also created, such as concealing or transferring the proceeds of criminal conduct, and assisting another person to retain the benefit of criminal conduct. This law applies to a wide range of financial institutions and professionals:
(a) any person or body carrying on or providing services in relation to the business of banking, bureaux de change, cheque cashers, insurance, investment, asset management or administration, trusteeship, company or trust formation and administration, the establishment of business enterprises or any matter ancillary to such business; and
(b) any person providing services of the type referred to in paragraph (a) in the course of carrying on the profession of a lawyer unless such services are incidental to the provision of legal advice and services.
In Guernsey, financial services businesses have a duty of vigilance to avoid assisting the process of laundering and to react to possible attempts at being used for that purpose. The duty of vigilance consists of verification, recognition of suspicious customers / transactions, reporting of suspicion, keeping of records and training. [Similar duties exist in Jersey and the IOM?]
In Jersey, the Proceeds of Crime (Jersey) Law, 1999, creates several offences related to money laundering. Article 32 makes it an offence to enter into an arrangement for the retention and control by or on behalf of another of proceeds of criminal conduct, whether by concealment, removal from the jurisdiction, or transfer to nominees. It is also an offence if the proceeds of criminal conduct are used as security for obtaining funds that are placed at another persons disposal or are used for another persons benefit to acquire property by ways of investment, knowing or suspecting that the other person is or has been engaged in criminal conduct or has benefited from criminal conduct. Pursuant to Article 33, it is an offence to acquire, use or possess property that is known to represent the proceeds of crime. Article 34 concerns the offence of concealing, converting or removing the from the jurisdiction the proceeds of a criminal conduct. Record-keeping, reporting and training obligations are imposed on those who carry on financial services business (article 37.)
Pursuant to the 1995 Criminal Justice Ordinance of Gibraltar know-your-customer requirements are to be observed by persons who carry on financial business: banks, life insurance companies, and investment business are covered, but neither company mangers nor professional trustees are. Drug Offense Ordinance (DOO) and the 1995, money laundering related to any crime is a crime.
Suspicious transaction reporting were extended by the new all-crimes money laundering legislation from suspicions of drug trafficking and terrorist offences to cover suspicions of crimes of all kinds, including tax evasion and other tax offences, as set out in the new all crimes money laundering legislation. The obligation to make suspicion reports rightly extends, as in the UK, to all categories of financial institution, bureaux de change, trust companies, other companies, lawyers, accountants, investment advisers and other partnerships and individuals. The 1998 Anti-money Laundering Code of the Isle of Man was amended in 1999 to impose reporting and "know your customer" obligations on financial businesses, which are lawyers, registered legal practitioners, and accountants holding accounts on clients' behalf; company service providers; and trust service providers. There was an exemption to identifying customers for business relationships formed prior to December 1998, but it has been removed.
Noteworthy, the Drug Trafficking (Bailiwick of Guernsey) Law, 2000 introduced an offence of failing to disclose knowledge or suspicion of drug money laundering.
The new all-crimes money laundering legislation extends the reporting obligation and the protection for staff, as in the UK, to transactions which institutions and staff suspect might be associated with crimes of all kinds, including tax evasion. It is an offence for any staff not to report such transactions to the authorities where there are clear grounds for suspicion.
As in the UK, financial institutions and professionals in the Channel Islands have a common law duty of client confidentiality, although there are no banking secrecy laws. However, the authorities have long had powers to override this duty in the pursuit of crime and the recent legislation has further enhanced their ability to do so. Following the United Kingdom practice, the principle of confidentiality has been eroded, in particular in cases where money laundering is suspected. Statutory instances of this erosion appear in several places, such as the Investigation of Fraud (Jersey) Law, 1991, the Banking Business (Jersey) Law, 1991. In Guernsey, the Money Laundering (Disclosure of Information) (Guernsey) Law, 1995 facilitates disclosure by persons who are under obligations of secrecy or confidence. Disclosures are allowed in cases where there is a reasonable suspicion or belief that money or other profits are derived from or represent the proceeds of criminal actions.
Despite comprehensive anti-money laundering systems, certain loopholes still exist. Guernsey has established a statutory system of fiduciary regulation. Approximately 200 businesses in Guernsey provide fiduciary services, principally acting as professional trustee and corporate service providers. The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 ("the Fiduciary Law") came into effect on 1 April 2001. However, abuse of corporate and trust vehicles has been a significant problem for Guernsey, in particular in Sark, which has no company law. There are circumstances in which a financial institution, represented by a regulated intermediary  often a lawyer - need not verify the beneficial owner of funds. Furthermore, Guernsey allows certain institutions based in certain overseas countries, subject to equivalent anti-money laundering systems, to introduce business without separately verifying the identity of the client. Banks and other financial institutions in Guernsey are only required to know the name of the client but not to verify the identity separately. Gibraltar has a similar system, whereby a financial institution can initiate a business relationship with a person whose identity they do not know if a certificate of introduction is provided by a business introducer. In Jersey, business introductions can be made without verifying the identity of the client.
Also, the Isle of Man has an active offshore financial services industry, with "exempt companies" that cannot conduct business on the island and are generally owned by non-resident. These companies are not required to disclose the identities of beneficial owners, and can issue bearer shares.
On the implementation and enforcement, or lack thereof, it is worth noting that not a single suspicious activity report to the Customs Financial Intelligence Unit has been filed by a lawyer in the period from 1992 to 1997.
See The September 28, 2000 Offshore Group of Banking Supervisors Mutual Evaluation Report of the Anti-Money Laundering System in Guernsey. See also The 1999 and 2000 Guernsey Financial Services Commission Report.
Also known as the Criminal Justice Law or the All Crimes Legislation.
Jersey follows the English High Court decision in Tournier (1924) which established a common law principle that persons who receive information in confidence, including bankers, have a duty to keep it confidential.
See Review of Financial Regulations in the Crown Dependencies, a report by Andrew Edwards to the UK Home Secretary (The Edwards Report)
See Review of Financial Regulation in the Crown Dependencies, chapter 14.3
(Continued )
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